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Wednesday, 17 February 2010

Starting an Online Busness or eCommerce Store

Many people contact us and ask about getting started with an Online Business so they can sell online. Most already have a day job or business and either want to extend or add to their current activities. The advice that we offer always starts with the same question.

Do you have a business plan?

This may sound like a mundane question but it is essential that you understand that starting an eBusiness is just like starting any business. Don't enter with your eyes closed. It is very easy to start a business on the web but that also means that it very easy to blow your money as well. When people come to us we try to determine if they have a real business opportunity because we want to see people succeed. In building a business plan for your ebusiness you have to take into account all the traditional issues. There is a good site that is run by the Australian government that is very useful. Here is a link to get you started with your business plan

You can start an online business for a few hundred dollars but plan your budget

Your online business will only be as successful as the plan that you have. The first important step in any business is to create a plan and a budget. There are many people right now thinking of selling online due to the current economic issues. What are the real costs associated with starting an online business or adding an online shop to an existing business.This is a question we are hearing often and the answer is not always as clear as there are many different views and opinions in the market place.There are a number of options to sell online here are some of the common ways we see:

Use an existing service like eBay there you will pay fees to list your products and also a “Final Value Fee” which is a percentage of the sale price. If you are selling your old books or stuff eBay is a great solution. Many businesses also sell on eBay as Power Sellers however costs can get high and there are limitations on what you can do.

Buy some open source online shop software, have a developer build a store and find somewhere to host it. There are pro’s and con’s but it is NOT FREE. The initial costs maybe lower but the longer term costs of maintenance and management can be very high.

Get your "friends, friend", who happens to be a web developer, to build you a website and shopping cart. This is failure waiting to happen and is the least recommended solution.

Use a fully hosted eCommerce Solution such as eCorner. There are many to choose from and a quick Google search on “hosted ecommerce solution” will find many companies that offer a package. My tip is that if you are based in Australia or New Zealand make sure that the hosted solution is here and not in the USA or Europe. The hosted solutions in general are based on some proprietary software but the setup and maintenance is much easier. These systems are in general also upgraded in features and functions free in the hosting environment and with a maintenance agreement if in a dedicated server.

How do we compare to other solutions

Every eCommerce Solution that you review will have similarities and differences. So it is a good idea to compare solutions around the key elements that are necessary for a successful online business. eCorner has created this quick comparison chart to allow you to compare eCorner with alternative solutions.

Sample Estimated Costs for SMEs

The following table provides some guidence for a first years budget to setup the website side of an online business. The shop size generally reflects the number of products (SKUs) that are for sale on the store. This determines the data base size and give a reasonable guide to complexity. Although you can get very busy shops with lots of visitors and sales but with only a few different products available.

Small shop = up to 100 SKUs

Medium shop = up to 1000 SKUs

Larger shop = up to 5000 SKUs

Very larger shop = over 5000 SKUs

Annual Recurring Costs

Small Shop

Medium Shop

Large Shop

Domain (per domain)

$99.00

$99.00

$99.00

Business email (per 5 adresses)

$99.00

$99.00

$99.00

SSL Certificate (per certificate)

Optional

$260.00

$260.00

Total Annual Recurring Costs

$198.00

$458.00

$458.00

Monthly Recurring Costs

Website

$99.00

$122.00

$177.00

SEO

Optional

Optional

$100.00

SEM (based on Adwords clicks)

Optional

$250.00

$500.00

Payment integration

Included

Included

Included

Shipping Integration

Included

Included

Included

Total Monthly Recurring Costs

$99.00

$372.00

$777.00

One Time Costs (Optional)

Design (estimate)

$600.00

$600.00

$2,000.00

Customisation (estimate)

$1,000.00

Total One Time Cost

$600.00

$600.00

$3,000.00

First Years Budget Estimate (from)

$1,986.00

$5,522.00

$12,782.00

You can download two informative documents that can help you start your online business and build your online store.

General eCommerce and eBusiness Costs

When starting an online business selling products or services there are some costs which you can expect before you make your first sale. Your online store is a sales channel and acts like a sales person for your business. Selling online can be very cost effective as there are less human resource and infrastructure costs unlike a "bricks and mortar" business. But don't be fooled selling online is not free and your results will be directly dependant on your investment, quality of service and products. There are many costs which will not be covered in this article such as cost of products, warehousing, logistics, traditional marketing, business taxes and accountancy fees. All these traditional costs still exist and don't magically vanish if you sell online.If you are reasonably technically capable and don’t mind doing some work yourself then the budget can be less than $100 a month for the online store. If you have a professional designer and web developers create a design and add content then your budget will need to start around $2,000 + $100 / month. The more design and functional complexity the more cost and therefore budget required. But you can start small and add functionality later so the online store and your budget grows with your business.Successful selling online requires as much business acumen and planning (maybe more) as any traditional business. Getting started is not hard but there are so many opinions on the technology that can be confusing to a non-technically minded person. There are also many technical terms and issues which often just confuse. eCorner and all our partners use ePages which is world leading online shop software with all the features for successful online selling. It is a proprietary solution meaning that you pay a monthly fee to use the software or you can buy a license if you are a larger business with the need for dedicated servers.Following is a quick summary:

You need a domain name

You need a business email addresses

You need a website with a shopping cart or you can use eBay (or similar) or both

You will need to have a design and some development for your website

You will need some Search Engine Optimisation (SEO)

When your website is live you will need to do Search Engine Marketing (SEM) – pay per click (PPC) with Google Adwords as an example

You may need an SSL Certificate (recommended if you accept credit cards)

You will need a payment gateway or payment provider and maybe an online merchant bank account.

You will need a shipping company - like Australia Post to deliver products

Don't forget the traditional business costs, taxes, charges etc.

You will need some human resources - maybe that is just you. But if you have a full time job remember that the online business will not look after itself.

Web analytics to track visitors and business conversion data.

Domain and eMail

To run a successful website you might need a domain name and business email addresses.Visitors who come to your website may want to send you messages and we highly recommend that you do not use a personal email address. So you may need a sales and an info email address at least. Expect to pay around $99 per year for 5 email boxes, the more you get the cheaper they get.To set up a .com.au domain name you need a registered business with an ABN or ACN in Australia. You can expect to pay $99 for two years. Domains for .com will cost less but for Australia we recommend you get the .com.au domain.You can get cheap domain names but the service provider may not provide the DNS hosting which is necessary and will be an extra cost so check carefully. We have found with some of the really cheap overseas domain providers that the domain name is not transferrable for 12 months and is basically not usable.

SSL Certificates

The SSL or Secured Socket Layer is about providing security and confidence in your online shop. It is highly recommended that you have your own SSL if you expect to be really successful online. Many hosted solutions will come with shared SSL which means that it is secured. However when your visitors go to secured pages the URL (or your domain name) will change to that of the SSL Certificate owner who will be the payment provider or hosting company. This can cause concern and basket abandonment (or potential buyers that add a product to your shopping cart but do not complete the sale).

Online Store Package

There is a large range of online store providers and prices range from $50 per month up to $100's per month. So do not be afraid of shopping around and trying out different solutions and suppliers. eCorner provide a number of different levels of packages that vary in price and capability. Packages are scalable up to 10,000's of products online. The four most popular packages key difference is the number of products that are for sale on the website although the packages will vary in functionality. These are perfect for small to medium sized businesses. Our online store packages include hosting and data as part of the package. That is not the same with all providers so you should always make sure of the total cost of hosting, data and website. Our Starter+, Merchant and Professional Packages all integrate with Payment Gateways such as PayPal and eWAY that allow you to accept Credit Cards Online. All of our Payment Partners comply with the Payment Card Industry Data Security Standards (PCI DSS)

Graphic Design

With a Hosted eCommerce Solution like eCorner Store Plus you generally don't need to spend anything.If you have something special in mind for a custom logo or banner then it might need to be designed by a professional graphics designer. In general we would recommend that you get started with the designs available from eCorner. These are very flexible and you can change colours, add logos and banners.If you want a special design then we can help by working with you to refine your requirements but take a look at what is available from eCorner for free first.A custom design can cost as little as $600 - $1,200 to produce and add to the online shop.

Custom Functionality

The packages that eCorner provide come with just about anything you will ever need to run an eCommerce store. If you are starting a new eCommerce business we would recommend that you use as much of the out-of-the-box or standard functionality as possible and our stores have it all. Your online business will start to make money for you then you can look at expanding and adding new functionality.Web development can cost over $150 per hour but varies by provider. We recommend that you ask for a full proposal with specification and a work order the identifies the work and time for each task for your approval so you know what you will get. You should always look at the Terms & Conditions and ensure that there is a warranty period. Expect to pay some part upfront but you should always hold some part of the payment back to ensure completion as you expected. Check if the development company has product and professional indemnity as a mistake may cost you a lot of money online.

Payment Gateway

If you want to accept credit cards online we recommend that you use a Payment Service Provider and process the credit cards via a Payment Gateway. There are strict regulations around the use and storage of credit card information which are regulated by the Payment Card Industry via their Data Security Standards you can find more information at their website www.pcisecuritystandards.org or through your bank. All eCorner Stores are PCI DSS compliant.Payment Gateways have to be integrated into your website. eCorner has already integrated a number of leading Payment Gateways including PayPal (Standard, Express and Payflow), eWAY, Dialect Solutions, DPS, Netregistry, Camtech, SecurePay and Worldpay. These are made available as part of the package from eCorner. You will need to setup an account with the Payment Service Provider (and maybe also and online merchant account with your bank) to take online payments.

Shipping and Logistics

eCorner provide a wide variety of shipping methods built in which you can setup on your website. These handle just about any possibility. We also provide integration to Australia Post for calculating shipping cost in the shopping basket.The actual shipping cost to send your packages is not part of the eCommerce package and you need to make sure that you calculate and add shipping cost correctly.

SEO and SEM

Search Engine Optimisation and Search Engine Marketing can cost a lot of money. Luckily if you have decided on eCorner you will find that the websites have SEO capabilities built in. You really just need to follow the guidelines and advice in our FAQs and your website will be search engine friendly.Search Engine Marketing is a cost you need to consider carefully. We have seen good web businesses fail because they spent too much on Cost Per Click programs which were not targeted. Again we have some good advice in our FAQs. The actual cost of programs like Google Adwords and Yahoo Search Marketing will vary dramatically based on the types of products you sell and the geography that you target.As a broad guideline for an Australian targeted retail website, a $50 / day budget will get you about 25 click. But this varies greatly based on the cost of each keyword and the quality of your ads and website. Remember the way this works is when someone clicks on your ad it cost you money if they buy or not. So the best result is a very targetted set of ads and keywords.We help our customers SEM by listing them on our marketplace at www.ecornerstores.com.au.If you want professional Search Engine Marketing (SEM) results we recommend that you engage an SEM specialist company like Hot Goanna.

Web Analytics - Visitor and Page Tracking

A good online shop can often fail because the owners don't know what is really happening on the website. In order to understand the activity on the website you need to collect information about what visitors there are and what they do. This is collected by a web analytics program like etracker or Google Analytics. Every eCorner store comes already integrated with etracker but there is a cost for the etracker service. However you can also use fee analytics like Google Analytics on your online store.